MPESA surpasses Western Union in transactions globally

It was interesting to come an article in the Daily Nation reporting Safaricom’s MPESA had more transactions than its global rival, Western Union, across the world.

The International Monetary Fund in its October outlook on the African economy observed that MPESA processes more transactions domestically within Kenya than Western Union does globally, and provides more banking facilities to more than 70 per cent of the country’s adult population.

According to Wikipedia, it was entirely developed by Kenyans and was initially sponsored by the UK-based Department for International Development (DFID) in 2003–2007. The initial concept of M-PESA was to create a service which allowed microfinance borrowers to conveniently receive and repay loans using the network of Safaricom airtime resellers. This would enable microfinance institutions (MFIs) to offer more competitive loan rates to their users, as there is a reduced cost of dealing in cash. The users of the service would gain through being able to track their finances more easily. But when the service was trialled, customers adopted the service for a variety of alternative uses; complications arose with Faulu, the partnering microfinance institution (MFI). M-PESA was re-focused and launched with a different value proposition: sending remittances home across the country and making payments.

Since then, MPESA boasts of over 14 million customers and about 28,000 agent outlets across the country. An online article on MobileMoneyAfrica cites a Central Bank of Kenya which reports that Safaricom’s mobile money service MPESA transacted a massive Kes 727.8 billion (or USD 7.278 billion) last year, which was representative of 305 million transactions carried out in the year, according to 2010 annual bank supervision report. “MPESA was still the most widely used method of mobile money transfer as evidenced by the 305.7 million transactions effected and valued at Kes 727.8 billion in the year,” reads the report in part.

This means that on average, the service moved Kes 2 billion (USD 20 million) daily.

Person-to-Person transactions for March 2011 stood at Kes 47 billion (USD 470 million) , according to figures released during the investor briefing in March.

Since being launched in March 2007, MPESA’s popularity has been growing from strength to strength. For instance, the number of users grew from 6.1 million in 2009 to 9.4 million in 2010 and 13.8 million users as at March 2011. On revenue side, Safaricom made some Kes 11.78 billion (USD 117.8 million) from MPESA last year up from Kes 7.56 billion (USD 75.6 million) the previous year, a 56 per cent growth.

According to Safaricom’s annual report for the year ended 31 March 2011, Cumulative value of transactions from inception is Kes 828 billion (USD 8.28 billion). M-Pesa competes with services such as Airtel Money, Orange Money and Yu-cash. “In only four years of existence of mobile phone money transfer services, four mobile operators have enrolled over 15 million customers,” the CBK report says.

According to Mumo, Orange Money transacted over Kes 50 million (USD 500,000)  on the first month of launch late last year but the figure could now be over half a billion. “Orange Money allows bigger transactions and that is why we want to partner with Saccos,” Mumo said.

The popularity of MPESA has seen the service attract international recognition. The service won the Mobile Money for the Unbanked Award at this year’s Global Mobile Awards 2011 in Barcelona, Spain. The service is also being tried in other countries. In Tanzania, where the product was launched by Vodacom, MPESA has 1.6m active and 7 million registered users.

The service has however failed to pick in South Africa where it was launched in August last year in partnership with Vodacom. Last month, Vodacom disclosed that it has only managed to register about 100, 000 MPESA users in SA so far. Vodacom said MPESA has fallen short of its expectations for the product. When it unveiled the product, Vodacom said it expected to sign up 10 million customers within three years.